WASHINGTON (AP) - President Barack Obama’s health care overhaul is unfolding
as a national experiment with American consumers as the guinea pigs: Who
will do a better job getting uninsured people covered, the states or the
The nation is about evenly split between states that decided by Friday’s
deadline they want a say in running new insurance markets and states that
are defaulting to federal control because they don’t want to participate in
“Obamacare.” That choice was left to state governments under the law:
Establish the market or Washington will.
With some exceptions, states led by Democrats opted to set up their own
markets, called exchanges, and Republican-led states declined.
Only months from the official launch, exchanges are supposed to make the
mind-boggling task of buying health insurance more like shopping on
Amazon.com or Travelocity. Millions of people who don’t have employer
coverage will flock to the new markets. Middle-class consumers will be able
to buy private insurance, with government help to pay the premiums in most
cases. Low-income people will be steered to safety net programs like
“It’s an experiment between the feds and the states, and among the states
themselves,” said Robert Krughoff, president of Consumers’ Checkbook, a
nonprofit ratings group that has devised an online tool used by many federal
workers to pick their health plans. Krughoff is skeptical that either the
feds or the states have solved the technological challenge of making the
purchase of health insurance as easy as selecting a travel-and-hotel
Whether or not the bugs get worked out, consumers will be able to start
signing up Oct. 1 for coverage that takes effect Jan. 1. That’s also when
two other major provisions of the law kick in: the mandate that almost all
Americans carry health insurance, and the rule that says insurers can no
longer turn away people in poor health.
Barring last-minute switches that may not be revealed until next week, 23
states plus Washington, D.C., have opted to run their own markets or partner
with the Obama administration to do so.
Twenty-six states are defaulting to the feds. But in several of those,
Republican governors are trying to carve out some kind of role by
negotiating with federal Health and Human Services Secretary Kathleen
Sebelius. Utah’s status is unclear. It received initial federal approval to
run its own market, but appears to be reconsidering.
“It’s healthy for the states to have various choices,” said Ben Nelson, CEO
of the National Association of Insurance Commissioners. “And there’s no
barrier to taking somebody else’s ideas and making them work in your
situation.” A former U.S. senator from Nebraska, Nelson was one of several
conservative Democrats who provided crucial votes to pass the overhaul.
States setting up their own exchanges are already taking different paths.
Some will operate their markets much like major employers run their health
plans, as “active purchasers” offering a limited choice of insurance
carriers to drive better bargains. Others will open their markets to all
insurers that meet basic standards, and let consumers decide.
Obama’s Affordable Care Act remains politically divisive, but state
insurance exchanges enjoy broad public support. Setting up a new market was
central to former Republican presidential candidate Mitt Romney’s health
care overhaul as governor of Massachusetts. There, it’s known as the Health
A recent AP poll found that Americans prefer to have states run the new
markets by 63 percent to 32 percent. Among conservatives the margin was
nearly 4-1 in favor of state control. But with some exceptions, including
Idaho, Nevada and New Mexico, Republican-led states are maintaining a
hands-off posture, meaning the federal government will step in.
“There is a sense of irony that it’s the more conservative states” yielding
to federal control, said Sandy Praeger, the Republican insurance
commissioner in Kansas, a state declining to run its own exchange. First,
she said, the law’s opponents “put their money on the Supreme Court, then on
the election. Now that it’s a reality, we may see some movement.”
They’re not budging in Austin. “Texas is not interested in being a
subcontractor to Obamacare,” said Lucy Nashed, spokeswoman for Gov. Rick
Perry, who remains opposed to mandates in the law.
In Kansas, Praeger supported a state-run exchange, but lost the political
struggle to Gov. Sam Brownback. She says Kansans will be closely watching
what happens in neighboring Colorado, where the state will run the market.
She doubts that consumers in her state would relish dealing with a call
center on the other side of the country. The federal exchange may have some
local window-dressing but it’s expected to function as a national program.
Christine Ferguson, director of the Rhode Island Health Benefits Exchange,
says she expects to see a big shift to state control in the next few years.
“Many of the states have just run out of time for a variety of reasons,”
said Ferguson. “I’d be surprised if in the longer run every state didn’t
want to have its own approach.”
In some ways, the federal government has a head start on the states. It
already operates the Medicare Plan Finder for health insurance and
prescription plans that serve seniors, and the Federal Employees Health
Benefits Program. Both have many of the features of the new insurance
Administration officials are keeping mum about what the new federal exchange
will look like, except that it will open on time and people in all 50 states
will have the coverage they’re entitled to by law.
Joel Ario, who oversaw planning for the health exchanges in the Obama
administration, says “there’s a rich dialogue going on” as to what the
online shopping experience should look like. “To create a website like
Amazon is a very complicated exercise,” said Ario, now a consultant with
Manatt Health Solutions.
He thinks consumers should be able to get one dollar figure for each plan
that totals up all their expected costs for the year, including premiums,
deductibles and copayments. Otherwise, scrolling through pages of insurance
jargon online will be a sure turn-off.